Its the IRAs First Birthday. Here Are Five Areas Where Progress Is … – Rocky Mountain Institute

Its the IRAs First Birthday. Here Are Five Areas Where Progress Is Piling Up. The Inflation Reduction Act promised an unprecedented wave of clean energy investment. One year in, heres where were seeing progress.

Unprecedented. A landmark. The Super Bowl of clean energy.

Those are just a few of the superlatives that hit the airwaves when the Inflation Reduction Act (IRA) was signed into law on August 16, 2022.

The acts passage came as a surprise both politically emphasizing lower energy costs helped the bill clear years of oppositional brinksmanship and for its unprecedented scale. Toward the goal of shifting the US grid to 80 percent clean electricity and cutting climate pollution by 40 percent by 2030, the act mobilized an estimated $370 billion in federal incentives.

A year in, the early fanfare has resolved into unprecedented progress. Twelve months after passage, the IRAs impact in industrial investment, new jobs, and other economic activity already exceeds early estimates. To date, we have seen:

And while politics could yet alter its trajectory, the impact to date has been weighted towards traditionally Republican-leaning regions, a bias which may ensure its longevity in years to come. Given the rapid uptake, Goldman Sachs earlier this year upped their estimate of public IRA investment over the next decade to more than $1 trillion, with private sector spending potentially a multiple of that.

By design, incentives are drawing this investment widely across the United States, with a focus on disadvantaged, low-income, and energy communities. RMI estimates that, if they take full advantage of the IRA and adopt clean energy at the pace and scale needed to meet national climate targets, by 2030, each state could see:

On the ground, IRA incentives have already translated into a rush of announcements and projects spanning regions and industries, including both legacy and cleantech sectors. On the advent of the IRAs first birthday, heres a rundown highlighting the breadth of this progress.

Nourished by the IRA, manufacturing announcements have mushroomed across the country. While heavy on electric vehicles (EVs) and batteries, the greenfield factories and upgrades also include wind and solar sites, along with semiconductors, electronics, and others. The new capacity promises to boost US energy security and independence by reshoring key supply chains and strengthening US competitiveness as global leader in clean energy technologies. To date, 272 new clean energy projects have been announced, including:

Globally, sales of internal combustion vehicles peaked in 2017, and are now in long-term decline, according to Bloomberg NEF. As older cars and trucks are retired, the worlds combustion vehicle fleet will start to shrink after 2025. In the United States, the IRA is supercharging this shift, with incentives that span from electric school buses to battery factories and new charging infrastructure:

Buildings account for around a third of US emissions, making it one of our largest, most complex sectors to decarbonize given the age, diversity, and costs to retrofit Americas stock of millions of buildings. The IRA is tackling this challenge on multiple fronts:

Clean electricity is essential to decarbonize the wider US economy, whether to charge EVs and power greening buildings (see above), or to decarbonize industry (below). The shift is advancing steadily. In the first five months of 2023, wind and solar produced more power than coal, a first for the US. The IRA is continuing this shift:

Steel, cement, petrochemicals, and other hard-to-abate heavy industries pose a special challenge to decarbonize. For now, many rely on raw materials and/or high temperatures that only fossil fuels can affordably deliver at scale. The IRA aims to scale up affordable alternatives such as hydrogen which, if implemented cleanly, offers a clean alternative along with greener raw materials and recycling options:

The act has also unlocked financing via the reform of tax credits and innovative financing that prioritizes climate-friendly investment in historically disadvantaged communities:

The IRA is not only the most ambitious climate bill in US history. It is one of the most ambitious and complex efforts at economic and industrial reinvestment ever. By these standards, the progress the act has already made is enormous, but years of work and meaningful obstacles remain to fully deploy the IRA at the pace and scale needed to reach climate targets.

Chief among these obstacles is permitting. As project timelines stretch into the years whether to connect renewables projects onto the grid, or site new critical mining and industrial facilities streamlining the thicket of overlapping regulatory and administrative approvals is emerging as a make-or-break challenge for the US energy transition.

Despite challenges in implementation, the hundreds of announced projects and hundreds of billions of dollars in investment show the energy transition is out of the starting gate and gaining speed.

The challenge is increasingly shifting to subnational players such as states and cities as well as businesses and non-profits to mobilize the funding the IRA has unlocked. Ultimately, the IRAs full potential will be limited only by our own ambition to realize a clean energy future.

Photo courtesy of The White House via Flickr.

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Its the IRAs First Birthday. Here Are Five Areas Where Progress Is ... - Rocky Mountain Institute